Nipate
Forum => Kenya Discussion => Topic started by: RVtitem on September 03, 2014, 10:39:23 PM
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Take the other week, for instance. As I was getting my shoes polished, the shoeshiner was multitasking — on the one hand busy with brushes and soft cloths; on the other having a rapid-fire conversation with a friend of his. The content of the conversation was what was striking.
The two gents discussed the acquisition of a building in downtown Nairobi for the princely sum of “three-fifte” (presumably Sh350 million). The discussion went on at length (which led to my hope that the shoeshiner would be uncharacteristically slow that day).
From the conversation, it emerged that the two men were third tier agents of some sort — at the periphery of the property industry — but the conversation was eye-opening all the same.
The sign of the times for me was a few months ago, when I saw a listing in the newspaper for land sale in Lavington, Nairobi, of around Sh125 million an acre. This is more expensive than beachfront land in Greenwich, Connecticut (an online listing last week had a 5.6 acre property there selling at the equivalent of around Sh55 million an acre).
Why is Greenwich significant? It is the bedroom community for New York City, and also headquarters of many of America’s hedge funds. This is a town which is called home by the famed “Masters of the Universe” of the financial industry – people whose wealth is measured in the billions of dollars.
And that property in Lavington? In the face of properties valued upwards of half a billion shillings, that price now seems quaint.
The arguments about demand and supply may be half-valid, but they long ago ceased making any sort of sense. Speculators of all kinds now seem to be on the loose, and the result is a housing market that has priced itself out of reach of the middle class.
Let me illustrate this. A two bedroom flat in Westlands (information, again, gleaned from random listings online) rents at Sh75,000. The equivalent apartment costs Sh18 million.
Therefore, if one was to finance it through a mortgage (with a 10 per cent down payment, 15-year period, and at 10.9 per cent, currently the best rate on the market), one would be forking out Sh194,000 per month in mortgage payments to the bank.
More: http://www.businessdailyafrica.com/Opinion-and-Analysis/Why-Kenya-s-real-estate-scene-is-a-bubble-waiting-to-burst/-/539548/2437872/-/12fkykc/-/index.html (http://www.businessdailyafrica.com/Opinion-and-Analysis/Why-Kenya-s-real-estate-scene-is-a-bubble-waiting-to-burst/-/539548/2437872/-/12fkykc/-/index.html)
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The bubble has started to bust https://www.businessdailyafrica.com/markets/marketnews/Is-writing-on-the-wall-for-highend-houses/3815534-4293348-2oejyj/index.html . Prices of apartments to let have eased from 100k to 50-80k. In addition occupancy rate has gone down, most buildings have to let signs.
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hk, Let me ask you a question, and please forgive my ignorance. The commercial real estate segment is not run by laymen unlike residential, it is invested by Centum and such developers with venerable expertise and credible data. Aren't these asset managers supposed to be good at this? How do they overinvest so much and ruin their own party?
Even a layman could see this coming.
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hk, Let me ask you a question, and please forgive my ignorance. The commercial real estate segment is not run by laymen unlike residential, it is invested by Centum and such developers with venerable expertise and credible data. Aren't these asset managers supposed to be good at this? How do they overinvest so much and ruin their own party?
Even a layman could see this coming.
I am also puzzled. Centum isn't by any stretch of imagination a skilled investment outfit. C.K. kirubi is just a charlatan with his sidekick Mworia who got money the "kenyan" way. For a longtime there was this believe that prices of property couldn't be overpriced yet the underlying economy couldn't justify the valuations. Also there's a dearth of other potential investments if one doesn't either go into real estate or bonds(of course true entrepreneurs shun this). So this has led to bidding up of land and real estate.
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Maybe it's about time esp if Gov steps in to deliver cheap mass housing.
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Most Kenya properties are bought cash
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hk, Let me ask you a question, and please forgive my ignorance. The commercial real estate segment is not run by laymen unlike residential, it is invested by Centum and such developers with venerable expertise and credible data. Aren't these asset managers supposed to be good at this? How do they overinvest so much and ruin their own party?
Even a layman could see this coming.
Bubbles
I think I shared here. There’s a time I drove through Kileleshwa and I was shocked at the many ‘To Let’ signs I saw. Then I get to upperhill and saw some more commercial. I think there’s overheating all over. UpperHill is where many fantasies will be buried.
But biggest sign was an ad I saw where tenants were being enticed with two rent-free months. I’ve never seen such incentives nowhere in Kenya. That was a first.
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hk, Let me ask you a question, and please forgive my ignorance. The commercial real estate segment is not run by laymen unlike residential, it is invested by Centum and such developers with venerable expertise and credible data. Aren't these asset managers supposed to be good at this? How do they overinvest so much and ruin their own party?
Even a layman could see this coming.
Robina Robina lol
I cant believe you said that!!!
When you're doing great in investment, you want more, until reality sets in. That's why the stock mkt is tanking, and it's the psych 101 of investment.
If you can balance this out, Like Buffet did, you'll be rich.
In fact I have recently found out that just by reading a lot about investments, you can be the next Buffet. But there is a catch - Dont be greedy.
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I mean Parkerpen, just the other day the Centum MD Jim Mworia was being praised for his mercurial builder acumen, complete with highest paid CEO at $10K+ a day. Then I see the stuff about the loss-making Sidian and now this. Apparently he could not foresee a tier 3 banker's loss with the interest cap. All these stuff should be daylight for an expert. So much for the local Warren Buffet.
The greed you're describing should be for the masses - like the stock market - not professional estate developers. Looks like commercial could go down before residential while I expected the opposite.
David Ndii predicted this stuff.
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I mean Parkerpen, just the other day the Centum MD Jim Mworia was being praised for his mercurial builder acumen, complete with highest paid CEO at $10K+ a day. Then I see the stuff about the loss-making Sidian and now this. Apparently he could not foresee a tier 3 banker's loss with the interest cap. All these stuff should be daylight for an expert. So much for the local Warren Buffet.
The greed you're describing should be for the masses - like the stock market - not professional estate developers. Looks like commercial could go down before residential while I expected the opposite.
David Ndii predicted this stuff.
Centum is a sham and I said as much. All they do to report profits are revaluations
James Mwange and Oigara are the real deal
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Centum is a sham and I said as much. All they do to report profits are revaluations
James Mwange and Oigara are the real deal
If you mean Dr James Mwangi - there is that monstrous Equity Towers or something I saw near Radisson Blue? Then KCB- and Britam Towers. Safaricom is one of few big corps that lease offices. I suspect half these buildings are empty.
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The empire state coming up in Upper Hill...
Investors to build tallest apartment building in sub-Saharan Africa
https://www.nation.co.ke/news/Tallest-residential-building-Upper-Hill-Nairobi/1056-4293390-wf0b66z/index.html (https://www.nation.co.ke/news/Tallest-residential-building-Upper-Hill-Nairobi/1056-4293390-wf0b66z/index.html)
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Centum is a sham and I said as much. All they do to report profits are revaluations
James Mwange and Oigara are the real deal
If you mean Dr James Mwangi - there is that monstrous Equity Towers or something I saw near Radisson Blue? Then KCB- and Britam Towers. Safaricom is one of few big corps that lease offices. I suspect half these buildings are empty.
I meant they are real ceos
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Centum is a sham and I said as much. All they do to report profits are revaluations
James Mwange and Oigara are the real deal
If you mean Dr James Mwangi - there is that monstrous Equity Towers or something I saw near Radisson Blue? Then KCB- and Britam Towers. Safaricom is one of few big corps that lease offices. I suspect half these buildings are empty.
I meant they are real ceos
All these CEOs have invested big in commercial real estate. They are behind the bubble. Equity at least has some innovative ideas - KCB not so much. That pampered babyface Oigara I hoped would bring on board some real game - nothing besides that $500M entrepreneur thing on KTN I saw in Dec - Lion's Den or something like that. That's good strategy if they handle it as VC - with joint ownership - they could get lucky.
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If all Kenyan bluechips had proper VC like KCB Lion's Den - and Safaricom Spark Fund - they have the muscle to drive that. That's a real input to the economy than just SME loans or investment banking. Taking ideas off the ground is the hard part for young entrepreneurs.
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Centum is a sham and I said as much. All they do to report profits are revaluations
James Mwange and Oigara are the real deal
I couldn't agree more. Another one is cytonn. Two rivers mall which is awfully underperforming might take down centum and cooperative bank which is on the hook for more than $300m.
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I agree with HK in as far need to diversify investment from real estate to manufacturing and such primary sectors. Time for the bubble to burst....if that will make people invest in other areas of the economy.
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Another "estate" goes up for auction https://www.businessdailyafrica.com/corporate/companies/Bank-puts-Sh1bn-Kitisuru-estate-up-for-auction/4003102-4294780-9lgsucz/index.html Banks that have houses and buildings as collateral must start revaluing those assets.
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I mean Parkerpen, just the other day the Centum MD Jim Mworia was being praised for his mercurial builder acumen, complete with highest paid CEO at $10K+ a day. Then I see the stuff about the loss-making Sidian and now this. Apparently he could not foresee a tier 3 banker's loss with the interest cap. All these stuff should be daylight for an expert. So much for the local Warren Buffet.
The greed you're describing should be for the masses - like the stock market - not professional estate developers. Looks like commercial could go down before residential while I expected the opposite.
David Ndii predicted this stuff.
Robina,
It's the usual self praise for mediocre performance masked by massive price inflation and a poor non investigative press. Also that mercurial prowess is normally mis sold as being possessed y a certain type of ethnic heritage. Shock horror kubme ni porojo tu.
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Another "estate" goes up for auction https://www.businessdailyafrica.com/corporate/companies/Bank-puts-Sh1bn-Kitisuru-estate-up-for-auction/4003102-4294780-9lgsucz/index.html Banks that have houses and buildings as collateral must start revaluing those assets.
looks like a Nice design.